Crypto exchange Binance will launch a blockchain with support for smart contracts
Cryptocurrency exchange Binance will launch a new network that will be compatible with Ethereum. The Binance Smart Chain (BSC) blockchain relies on the Proof of Staked Authority (PoSA) hybrid consensus algorithm and uses Binance Coin (BNB) as a native token.
BSC supports smart contracts and in general, judging by the published technical documentation, it will be similar to the Ethereum blockchain. In particular, decentralized applications (DApp) can be launched in BSC, the popularity of which continues to grow.
“Ethereum is the first smart contract platform to be widely adopted. To be able to take advantage of relatively mature applications and the community, BSC will be compatible with the core Ethereum network, ”the document says.
Cross-platform blockchain
The exchange already uses its own Binance Chain (BC) blockchain, on which its decentralized trading platform Binance DEX is based. However, this network “does not provide sufficient freedom and flexibility for DApp developers”, therefore the exchange launches a new network.
Both blockchains will work in parallel - assets between them can be exchanged. According to Binance, its “decentralized trading platform will remain a liquid platform for the exchange of digital assets for participants in two blockchains. This double-stranded architecture will allow users to issue DApp and digital assets in one blockchain, taking full advantage of the fast trading of another. ”
Why you need a hybrid consensus algorithm
A document published by Binance says that the Proof-of-Work (PoW) algorithm is harmful to the environment and also requires a large number of participants to maintain network security. The Proof-of-Authority (PoA) algorithm is used in other blockchains (for example, in GoChain) and provides good protection against hacker attacks, however, it has certain problems with decentralization, and its validators are endowed with too much power.
The company considers the Delegated Proof-of-stake (DPoS) algorithm, which is called "Deputy Proof-of-Stake" in the document, to be effective. This algorithm allows network participants to select blockchain validators, which contributes to decentralization and management reliability.
The Proof of Staked Authority hybrid algorithm combines the main advantages of the last two algorithms:
Blocks are produced by a limited set of validators - a total of 21 validators are provided;
Validators alternately issue blocks according to the method used in PoA;
Validators are selected based on their stacks.
PoSA also allows network users to participate in BNB stacking.
“BNB is a token that is used for stacking in BSC. This is an attractive opportunity for all BNB holders who are interested in stacking. They can support the Binance Smart Chain and get a reward for it, ”the document says.
The concept described by Binance has already been criticized by The Block analyst Larry Chermak. In his opinion, the problem with Binance Smart Chain is that this blockchain is controlled by a single company.
“If you think that CZ Changpen Zhao will completely give up control, you simply rave,” writes Chermak.
Cryptocurrency exchange Binance will launch a new network that will be compatible with Ethereum. The Binance Smart Chain (BSC) blockchain relies on the Proof of Staked Authority (PoSA) hybrid consensus algorithm and uses Binance Coin (BNB) as a native token.
BSC supports smart contracts and in general, judging by the published technical documentation, it will be similar to the Ethereum blockchain. In particular, decentralized applications (DApp) can be launched in BSC, the popularity of which continues to grow.
“Ethereum is the first smart contract platform to be widely adopted. To be able to take advantage of relatively mature applications and the community, BSC will be compatible with the core Ethereum network, ”the document says.
Cross-platform blockchain
The exchange already uses its own Binance Chain (BC) blockchain, on which its decentralized trading platform Binance DEX is based. However, this network “does not provide sufficient freedom and flexibility for DApp developers”, therefore the exchange launches a new network.
Both blockchains will work in parallel - assets between them can be exchanged. According to Binance, its “decentralized trading platform will remain a liquid platform for the exchange of digital assets for participants in two blockchains. This double-stranded architecture will allow users to issue DApp and digital assets in one blockchain, taking full advantage of the fast trading of another. ”
Why you need a hybrid consensus algorithm
A document published by Binance says that the Proof-of-Work (PoW) algorithm is harmful to the environment and also requires a large number of participants to maintain network security. The Proof-of-Authority (PoA) algorithm is used in other blockchains (for example, in GoChain) and provides good protection against hacker attacks, however, it has certain problems with decentralization, and its validators are endowed with too much power.
The company considers the Delegated Proof-of-stake (DPoS) algorithm, which is called "Deputy Proof-of-Stake" in the document, to be effective. This algorithm allows network participants to select blockchain validators, which contributes to decentralization and management reliability.
The Proof of Staked Authority hybrid algorithm combines the main advantages of the last two algorithms:
Blocks are produced by a limited set of validators - a total of 21 validators are provided;
Validators alternately issue blocks according to the method used in PoA;
Validators are selected based on their stacks.
PoSA also allows network users to participate in BNB stacking.
“BNB is a token that is used for stacking in BSC. This is an attractive opportunity for all BNB holders who are interested in stacking. They can support the Binance Smart Chain and get a reward for it, ”the document says.
The concept described by Binance has already been criticized by The Block analyst Larry Chermak. In his opinion, the problem with Binance Smart Chain is that this blockchain is controlled by a single company.
“If you think that CZ Changpen Zhao will completely give up control, you simply rave,” writes Chermak.